TS Vijayan as IRDA chairman: Winds of change?

The appointment of a sectoral specialist as Chairman IRDA marks a welcome change

The government has reportedly zeroed in on former LIC Chairman TS Vijayan to head the insurance regulatory body, IRDA (Insurance Regulatory & Developmental Authority).

This is good news for a number of reasons. Most important is that it is the first time the regulatory body will be headed by someone from the insurance industry. The IRDA has seen three chairmen to date – N Rangachary, CS Rao and Hari Narayan – and all three were former bureaucrats; Rangachary from the Revenue Service and CS Rao and Hari Narayan from the Indian Administrative Service. Now IAS officers like to believe their varied career in the bureaucracy equips them to handle any responsibility (a view that is not shared by any outside that privileged circle!) but the fact is regulation, whether in the financial sector or otherwise, calls for skill sets that IAS officers do not possess.

That brings me to the second most important reason why Vijayan’s selection is a happy development. It is a change from the past trend of appointing bureaucrats to head regulatory bodies. Look around at our regulatory bodies – whether it is the Competition Commission or the capital markets’ regulator, Sebi or the Telecom Regulatory Authority, Trai, all are headed by former bureaucrats. Hopefully, the selection of a non-IAS man to head IRDA will break the stranglehold of the IAS over regulatory bodies and restore these bodies to sectoral specialists.

For Vijayan himself the selection marks a reversal in fortunes. He was demoted to managing director in May 2011 following charges of financial irregularities though these were subsequently dropped as being without basis.

He knows the sector well, having been a career insurance man. Consequently, insurance sector players who have been chaffing under what they argue is an excessively strict regulatory regime (though the jury is out on this) should be particularly happy. His main challenge as Irda board director, SB Mathur, put it rather bluntly, but correctly, will be in ‘dealing with ministry officials and other regulators who are ex-bureaucrats.’